Foundations Shake Under On-Line Ventures

March 16th, 2011 · No Comments ·

Last November, in a little-noticed event, an outage of the on-line
systems of a major credit card payment processor, Cyber Source,
occurred for about seven hours. The impact for several Internet stores
was dramatic: They couldn’t take orders and were effectively shut
down by the actions of an outside organization.

Other companies, such as Amazon.com, continued business
uninterrupted because they were ready to switch instantly to a
second payment processor in the event of problems with the first.

In effect, they implemented a long-cherished information technology
strategy — always have redundancy built into the system.

Of course, redundancy costs money. But this example
indicatesproper planning by Amazon.com and negligence by many
others.

While the CyberSource event itself may not be terribly significant, it
shows that a number of e-commerce sites, corporate Web sites or
other on-line initiatives are built on shaky foundations.

The media continues to report stories of Web sites that frequently
crash, cannot accommodate the number of visitors or face customer
support, procurement and fulfillment challenges.

People surfing the Internet continue to encounter error messages or
availability problems with various sites, slow response or transaction
processing times and Web designs that may have been cutting-edge
back in 1994.

Not to mention news reports that customer support e-mail or toll-free
lines continue to go unanswered for long periods.

Taken together, all of these seem to indicate that the corporate world
is waging a mighty struggle with the Web — and it isn’t winning.

The problem is that many organizations continue to fund their on-line
initiatives on a shoestring. These initiatives were once experimental,
but are now more significant to operations. Yet management
continues to throw a few budgetary crumbs their way to keep things
going. But that can only do so much to hold things together. When
things fall apart on-line, they do so spectacularly.

At the rate things are going, many companies will soon experience
the painful circumstances now encountered by discount brokerages.
Anyone using a discount broker’s on-line service has probably
recently received one of those fancy “we’re sorry” letters.

The one I received from TD Waterhouse indicated that they have a
whole series of plans under way to solve customer service, reliability
and availability problems. They plan to hire more staff, increase call
centre capacity, invest more in on-line infrastructure and boost many
other areas.

While the on-line brokerage situation could be considered a special
case, with trading volumes increasing four-fold by some estimates
since October, it shouldn’t be. What is to prevent such a massive
shift in customer activities and expectations from occurring in other
industries over the next few years?

The fact is, any organization needs to be prepared for significant
numbers of its customers to suddenly expect the ability to do
business electronically — and 100-per-cent reliability at all times.

E-commerce and on-line initiatives must be adequately funded,
supported and given the highest degree of management commitment
from the very earliest stage. As the wired economy continues to
unfold, and as business-to-business e-commerce takes hold, the
Web-based systems we are building today are likely to be the
lifeblood of organizations tomorrow. No one can afford to build such
systems on a piecemeal basis.

Organizations that discover this reality too late will soon be
scrambling to fix their on-line initiatives, much as we can see within
the discount brokerage industry today.

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